Economic Report: Existing-home sales saw first drop since 2010 last year

WASHINGTON (MarketWatch) — Existing home sales dipped in 2014, the first decline since 2010, despite several factors that should have helped the market, including low mortgage rates.

For all of 2014, existing home sales dipped to 4.93 million sales, a 3.1% decline from 2013, the National Association of Realtors reported.

Lawrence Yun, NAR chief economist, said the drop in sales last year was “mildly disappointing,” but said he expects sales to rebound this year.

Some of the factors that should have pushed home sales higher include a strengthening labor market, higher consumer confidence and mortgage rates that refuse to go up.

“All the indicators would have pointed to higher sales,” Yun said.

There should be pent-up demand that will help the market this year, he said.

Meanwhile, sales rose 2.4% in December to a seasonally adjusted annual rate of 5.04 million.

Economists polled by MarketWatch had expected a December sales rate of 5.08 million from the initial November estimate of 4.93 million. On Friday NAR revised November’s sales rate to 4.92 million.

Sales were boosted by a large gain in the West, which had been weak throughout the year.

Also Friday, NAR reported that the median sales price of used homes reached $ 209,500 in December, up 6.0% from the year-earlier period. For 2014 the median sales price reached $ 208,500, up 5.8% from the prior year.

Yun said there has been a modest acceleration of prices towards the end of 2014.

Low inventory levels have been supporting price growth. At the end of December, inventory was 1.85 million existing homes for sale, a 4.4-month supply at the current sales pace. Compared with a year earlier, there is a slight decline in inventories from December, the first decline in 16 months.

Yun said that there needs to be a sharp boost in new home construction to boost inventories.